Japan’s Mitsui is heard planning to divest its Brazil-based fertilizer unit, Fertilizantes Mitsui (FertiMitsui). The unit, whose operations are based in the state of Minas Gerais, is seen drawing attention from the likes of Vale and other fertilizer specialists, according to executives with knowledge of the sale. Fertilizer assets are drawing strong interest as demand for soft commodities rises. In January, Vale spent close to $5.6bn to acquire Brazil-based fertilizer assets from Bunge, Mosaic and Yara. FertiMitsui is understood to annual generate revenues of close to BRL200m. Its main product Yoorin is used to aid dozens of kinds of crops, and draws on phosphorous, calcium and magnesium, among other elements. Mizuho Securities, alongside its new Brazil-based partner G5 Advisors, is rumored to be advising Mitsui on the sale.
Latest News
Glencore Repos Colombia Coal Asset
Swiss commodities trader Glencore says it is exercising an option to repurchase Colombia-based coal company Prodeco from Swiss miner Xstrata for $2.25bn in cash plus profits accumulated during the option period, which ran for about a year through March 4. To pay for Prodeco, Glencore will seek to sell some of its assets, says a person with knowledge of the deal. He adds that the company is also looking into obtaining bridge financing of about $1bn. Glencore says it will seek to sell $1bn in assets within 3-6 months. Xstrata, which acquired Prodeco from Glencore about a year ago for $2bn, says the deal will provide it with “a robust cash return on the initial purchase price.” Moody’s says the deal has “positive credit implications beyond the handsome capital gain of $250m made on the deal.” Moody’s views the transaction positively for Glencore saying that “under current price conditions, Glencore should be able to improve its credit metrics during 2010 against the weak levels anticipated for full-year 2009, and meet our guidance for the Baa2 rating by year-end.” It also says Glencore may have maintained cash and committed availabilities well in excess of its targeted minimum cushion of $3bn ahead of the Prodeco transaction. Rothschild is the target’s financial advisor. Morgan Stanley and Credit Suisse are advising Glencore.
Slim Investor Focuses on Growth
The Enesa investment fund recently set up by Grupo Carso and Telmex – both part of Carlos Slim’s empire – will focus on growing the companies it is in the process of acquiring, manager Jaime Chico Pardo Chico tells LatinFinance. “We expect to close the acquisition of these companies in 1-2 weeks,” says Chico, who is the fund’s president and general director and holds a 40% in it. The companies being acquired, all in Mexico, are Selmec, Hubard and Boulon, Optima Energia, Laboratorios Medicos Polanco, and Laboratorios Clinicos Puebla. They are being purchased from Grupo Carso and Cinca-Inbursa. Chico does not disclose the price being paid for each company, and only says that Enesa is taking a controlling stake in each without adding leverage. He explains that some of the companies could be merged and then grown via acquisition or organically. Chico adds that the intention is to hold on to the investments for the long-term and not seek a quick exit. “We want to help them expand internationally,” he says. The fund, initially set up with about MXP2bn, hopes to eventually raise a total of MXP3.5bn, although Chico would not say when he expects to reach that amount. He does say that he and Grupo Carso have contributed their own resources to the fund and that various institutional investors have expressed interest in allocating.
Brazil Manager Builds Commercial RE Fund
Prosperitas, the Sao Paulo-based commercial real estate specialist, is heard close to unveiling its third private equity (PE) fund, Prosperitas Real Estate Partners III. Size will be capped at $750m, but the fund is heard to have seen over $2bn in demand, say people familiar with the process. The new vehicle, like its 2 predecessors, counts on several global institutional investors, including the Washington State Investment Board. Washington State has committed $50m tickets to the first and second Prosperitas funds, bringing the asset manager’s equity under management to close to $2bn. This makes it one of Brazil’s largest independent managers of commercial properties. Prosperitas’ PE funds have historically posted returns of 20% and higher, say buysiders. Brazilian commercial real estate has enjoyed substantial investor scrutiny in recent weeks. BR Properties’ IPO which priced late Thursday, and will keep it in the spotlight, while WTorre, another Sao Paulo-based commercial developer, filed for an IPO recently. The Prosperitas fund is managed by Jorge Carlos Nunez, Luciano Lewandowski and Maximo Lima.
Nexxus Clinches CCD, Eyes More Funds
Private equity firm Nexxus Capital has closed a certificado de capital de desarrollo (CCD) transaction in Mexico’s local market, the largest to date from a private equity fund. The 2020 deal priced at MXP100 and raises MXP1.46bn for Nexxus’ fourth private equity fund, which invests in a wide variety of assets in Mexico over a 5-year period. Through the transaction, investors get 80% of the fund’s proceeds and Nexxus receives 20%, as long as the CCD buyers’ initial investment plus a 10% preferred return is met. The CCD was bought by 11 different Afores, private pension funds and family offices. Proceeds are for a fund following Nexxus’ normal guidelines – purchases of stakes worth $25-$45m in mid-sized companies with growth potential tied to Mexicans’ increasing purchasing power. No single transaction can be worth more than 20% of the fund. BofA-Merrill Lynch, Santander, and Ixe managed the transaction. Nexxus founding partner Luis Harvey tells LatinFinance there should also be an equal amount raised in via traditional channels for a fifth fund that co-invests with a fourth, drawing largely from investors in Nexxus’ previous vehicles. He says the CCD transaction took about 11 months from start to finish, compared to 18 months years for its previous private equity funds. “There was a learning curve for the executives at the Afores, and they are quick learners. Our expectation is that next time the process will be faster, but by how much I don’t know,” Harvey says. Among the most important factors speeding up the process for Nexxus was track record, he adds. The group’s second fund still holds $180m in Genomma Labs stock. It expects to close in April the sale of another business, Sports World, for $60m. Close to 30 CCDs remain in the Mexican domestic pipeline, though many are advancing at a sluggish pace, with institutional investors analyzing the new structures carefully. Those tied to private equity and infrastructure seem to be gaining most traction. Nexxus is the f
Ternium Gets Vene Compensation
Argentine steel company Ternium says it has received $300m in compensation due from the sale of Sidor to Venezuela’s national Corporacion Venezolana de Guayana. It got $158.2m due under the first tranche, and $142.0m mandatory prepayment due under the second tranche. Ternium completed the sale for a total $1.97bn. Ternium manufactures and processes flat and long steel products for the construction, home appliance, capital goods, container, food, energy and automotive industries. Its main operations are in Mexico and Argentina.
Brazil’s CBD Names New CEO and CFO
Companhia Brasileira de Distribuicao, the major Brazilian retailer, has appointed Eneas Cesar Pestana Neto as CEO, in line with expectations. Jose Antonio Filippo was appointed CFO and the company has removed its COO position. Pestana has been with CBD unit Grupo Pao de Acucar since 2003, while Filippo was previously CFO and IR officer at CPFL Energia. Claudio Galeazzi was appointed by CBD 2 years ago to help prepare a CEO from inside the company. Galeazzi will continue participating in and contributing to management. He will also coordinate all Galeazzi & Associados’ projects with the group, including integration of Globex and Casas Bahia. CBD operates in 18 states in all regions of Brazil and the federal district. CBD had an extremely active 2009, highlighted by the BRL870 June deal to buy Globex, the controller of the Ponto Frio chain, and the December announcement of a merger with retailer Casas Bahia.
IDB to Approve Jamaica Loans
The IDB says it plans to support Jamaica by extending $600m in loans this year. The announcement comes after the country’s government executed a voluntary debt swap that registered a 99.2% participation rate. It also signed a $1.3bn stand-by arrangement with the IMF and obtained support from the main multilaterals for its economic reform program. The IDB has already approved some $200m in new loans to Jamaica this year.
Remittances Stabilize After Tumble
The IDB’s Multilateral Investment Fund (MIF) says money transfers from LatAm and Caribbean migrants to their families back home are likely to stabilize in 2010. Remittances dropped 15% to $58.8bn in 2009, less than what was seen in 2006 and the first year-on-year decline since records started in 2000. “In the short term, significant recovery in the volume of remittance flows is unlikely, largely due to the uncertain outlook for economic growth in traditional remittances sending countries,” says MIF. “But the signs of stability of the last months could provide a basis for an estimate of stabilized remittance levels, or event the beginning of a new period of single-digit growth in the near future.” The fund says stabilization was already visible in 4Q09, suggesting a bottoming-out of the decline. Until 2009 the average annual growth had been 17%, although it started to fall in 2006 and diminished considerably in 2008, as the global economic crisis hit migrant employment and income levels in countries such as the US, Spain and Japan, according to MIF. Mexico, the largest recipient of remittances, suffered a 16% drop in 2009 to $21.1bn owing to US exposure. Central America saw a 9% decrease in remittances, while Brazil took a 34% hit, extending a trend that had started well before the global crisis. “Brazilian migrants have tended to return home, encouraged by their country’s improving economic performance and their dwindling prospects in host countries such as Japan,” says MIF. In countries like Haiti, Guatemala, Honduras, Nicaragua and El Salvador remittances still represent more than 10% of GDP, it adds.
Indian Pharma Shops In Brazil
Indian pharmaceutical company Strides Arcolab says it is acquiring the Brazil-based penems and penicillins manufacturing business of South Africa’s Aspen Pharmacare for $75m in cash. The buyer says the acquisition is part of its efforts to grow its specialty injectable business and that the unit’s revenues are expected to reach $40m annually. Aspen, meanwhile, says it is restructuring its LatAm business, where revenue from domestic brands has declined by 15% to ZAR345m ($46m). The primary underperformer is the Brazilian business, says the seller. The deal was privately negotiated.